THE DY. COMMISSIONER OF INCOME TAX,, VADODARA vs. M/S. VADODARA ENVIRO CHANNEL LTD.,, VADODARA

First we take Revenue’s appeal.

Brief facts of the case are that assessee is engaged in the business of treatment of industrial waste-water discharged by the participating member companies and conveyance of industrial effluent & maintenance of channel in the industrial area of Vadodara. It has filed its return of income for the Asstt.Year 2013-14 on 29.9.2013 declaring total income at Rs.3,44,25,430/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. In the assessment proceedings, it was noticed by the AO that the assessee has received capital contribution of Rs.2,52,73,456/- from participating members as contribution towards life time membership for availing of effluent disposal facility offered by the assessee company. Assessee company claimed the same as capital receipts and not revenue receipts. The AO confronted the assessee as to why entire receipt of contribution amount should not be treated as revenue. It was explained by the assessee that the contributions from the members were being utilized on constructing channel and purchasing mechanical equipments, and therefore, this contribution had to be treated as capital receipts, as the benefit of which accrued to the participating members were of enduring nature. Therefore, entire income could not be treated as revenue income. The assessee treated the same as revenue receipt in the first year, but recognized the income to the extent of 1/5th and rest of the amount was to be taxed on deferred basis for next four years. However, the ld.AO did not accept this treatment of

Before us, the ld.DR supported the order of the AO, while ld.counsel for the assessee relied upon the order of the ld.CIT(A). He further submitted that ITAT in the assessee’s case in ITA No.766/Ahd/2016 for the Asstt.Year 2012-13 allowed similar claim, and therefore, facts and circumstances being identical in this year as well except quantum, there is no reason to disallow the claim of the assessee by deviating the view taken by the Tribunal in the earlier years. The ld.counsel for the assessee has placed on record a copy of above order of the ITAT.

We have considered rival submissions and gone through the record carefully. We find that similar claim of the assessee was allowed in earlier years i.e. Asstt.Year 2011-12 and 2012-13 by the ld.CIT(A) which was upheld by the Tribunal. We have perused orders of ITAT for both the years. There is no disparity on facts pointed out by the ld.DR. Therefore, applying principle of consistency, we uphold the order of the ld.CIT(A) on this issue and reject the ground of appeal of the Revenue.

Now we take assessee’s appeal.

The grievance of the assessee is that the Revenue authorities have erred in making addition of Rs.12,60,252/- as undisclosed receipts of bank and other interest income.

Brief facts of the case are that as per the details submitted by the assessee, the AO noticed that there was difference in the amounts shown as per Form No.26AS and the income shown in the books of accounts. This amount was added as income of the assessee. In appeal before the ld.First Appellate Authority, assessee submitted that on reconciling the books of accounts of the assessee and Form NO.26AS there were instances of differences, which was happened due to late updation. For example, for the asstt.Year 2013-14 (F.Y.2012-13), the details were added/updated in the TDS even after September, 2013 i.e. after filing of the return of income, therefore, it was likely that such income being left out for consideration in that year, however, short interest income was recognized in the succeeding assessment year. It was also submitted that interest income from Bank of Baroda for F.Y.2012-13 was received in F.Y.2013-14, but the same was offered for taxation in the Asstt.Year 2014-15, and therefore, there was no loss to the Revenue. It was also submitted that the interest income from DGVCL was adjusted towards electricity bill raised by the DGVCL, which was properly accounted for. However, the ld.CIT(A) did not accept the submissions of the assessee, because according to the ld.CIT(A), there was no supporting documentary evidences and details. He

Before us, the ld.counsel for the assessee reiterated submissions made before the Revenue authorities. He further submitted that difference of interest income was due to late reflection of details in TDS certificate, that too after filing of the return. Whatever differential amount was there, has been recognized in the succeeding assessment year i.e. 2014-15 and offered for taxation, therefore, there is no question paying double tax on the income already offered. On the other hand, the ld.DR relied

We have considered rival submissions and gone through the record carefully. We find prima facie that there is a difference of interest income shown in the Form 26AS and interest reflected in the books of accounts. This is due to late updation of figures in the Form No.26AS. However, the assessee has claimed that the differential amount has been offered to tax in the next assessment year i.e. 2014-15, and therefore there is no question making addition in the assessment year 2013-14. The assessee has filed the details of interest earned during the Asstt.Year 2014-15 and short interest of the Asstt.Year 2013-14, which was recognized in the Asstt.Year 2014-15 and offered for taxation. Since assessee has claimed that it has already offered the differential interest income for taxation in the next assessment year, we are of the view that the AO should verify these details, and find out whether the same was offered for taxation or not. For this purpose, we set aside the issue to the file of the AO for reconsideration on the basis of the details furnished by the assessee, and in case the

In the result, appeal of the Revenue is dismissed, and that of assessee is allowed for statistical purpose.